The Centre for Enterprise Governance has stated that micro, small and medium enterprises must adopt basic governance structures to survive and grow under Nigeria’s evolving tax reform regime.
In a statement, the founder of the CEG, Dr Adeyinka Hassan, said the country’s business environment is shifting towards stronger accountability, formalisation and compliance, making governance essential for MSMEs rather than a luxury.
“Governance is becoming critical because Nigeria’s business environment is moving toward systematic accountability, formalisation and compliance-driven sustainability, which directly affects MSMEs,” he said.
Hassan noted that tax reforms are expanding compliance expectations and strengthening enforcement, exposing businesses without governance frameworks to serious operational and financial risks.
He explained, “As tax reforms expand compliance expectations and enforcement capacity, MSMEs without basic governance structures face existential risks, while those with governance are better positioned to adapt and grow.”
The expert identified weak internal systems as a major factor limiting MSMEs’ ability to comply with tax obligations and access finance. He noted that a strategic diagnosis by CEG showed that many small businesses were still operated informally.
He said, “These include informal decision-making without documentation, weak financial management and record-keeping, absence of internal controls and accountability structures, limited understanding of regulatory and tax obligations, and lack of access to governance education or advisory support.”
Hassan explained that poor governance exposes MSMEs to tax penalties and disruptions, as incomplete records and unclear financial trails often result in incorrect filings, disallowed expenses and enforcement actions.
“Poor governance leads to incomplete records, unclear financial trails and weak controls, which increase exposure to penalties, interest and disruptive audits,” he added.
The CEG chief warned that the perception of governance as a “big company” issue is increasingly dangerous, noting that MSMEs are now part of regulated value chains and formal financial systems.
“Scale no longer shields businesses from scrutiny. Without governance, MSMEs lose credibility, funding access and partnership opportunities, undermining the very growth they seek,” he said.
Hassan urged every MSME to adopt basic governance structures, including clear roles and authority, financial controls, proper record-keeping, defined compliance ownership and periodic advisory support.
“These are the competencies CEG’s enterprise clinics, membership training and mentorship programmes are designed to deliver,” he remarked.
He added that strong record-keeping and internal controls would help MSMEs adapt to tax reforms by enabling accurate filings, reducing disputes and improving credibility with regulators and financiers.
Dr Hassan urged MSMEs to prioritise governance reforms in the new year by formalising records, separating personal and business finances, establishing compliance routines and seeking structured governance education.
“Governance is no longer optional; it is the operating system of sustainable enterprise,” he said, adding that CEG’s shared training and advisory model makes governance affordable and accessible for small businesses.
The PUNCH earlier reported that SMEs would gain significantly from the new tax laws by repositioning their internal processes, strengthening tax reporting, and deepening engagement with the government, according to business stakeholders.
The Director of Africa Retail Academy, Prof. Uchenna Uzo, encouraged SMEs, particularly retailers, to adopt stronger internal operations under the new tax regime, as they would be among the most exposed to the new tax regime, making operational adjustments inevitable.
He said, “A lot of businesses are going to need to change a lot of their internal processes. Some things they were not doing before; they will need to incorporate them to be able to harness the potential of this new policy.”
Uzo encouraged retailers to review their tax reporting practices, invoicing, pricing, and manufacturers and supplier management.
